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I RUBY PAUL the student of VPM’S R.Z.SHAH COLLEGE of

(2010-11) hereby declare that I have completed the Project On
NATIONALISED BANK. The information submitted is true and
original to the best of my knowledge.




1 I


2 II

































3.1 HSBC BANK {1950}


3.4 ATM


4.2 ATM

If words are to be considered to be a sign of gratitude then let these words convey the
very same. My sincere gratitude to HSBC bank and ALLAHABAD bank for providing
me with an opportunity to work with the bank and giving necessary direction on doing
this project to the best of my ability.

I take this opportunity to thank University of Mumbai for giving me chance to do this
project. I would like to thank my principal for providing the necessary facilities required
for the completion of this project. I take this opportunity to thank our co coordinator and
my guide Miss Sujata Zalkikar whose valuable support and guidance helped me in every
aspect of this project. I express my heartfelt gratitude to MR. Vijay Yadav, HR manager
of HSBC Bank. I would like to thank my college library, for having provided various
reference books and magazines related to my project.

Lastly I would like to thank each and every person who directly or indirectly helped me
in the completion of the project especially my parents and friends who supported me
throughout my project.

The name bank derives from the Italian word banco "desk/bench", used during the
Renaissance by Florentines bankers, who used to make their transactions above a desk
covered by a green tablecloth. However, there are traces of banking activity even in
ancient times.

In fact, the word traces its origins back to the Ancient Roman Empire, where
moneylenders would set up their stalls in the middle of enclosed courtyards called
macella on a long bench called a bancu, from which the words banco and bank are
derived. As a moneychanger, the merchant at the bancu did not so much invest money as
merely convert the foreign currency into the only legal tender in Rome- that of the
Imperial Mint.

Banks have influenced economies and politics for centuries. Historically, the primary
purpose of a bank was to provide loans to trading companies. Banks provided funds to
allow businesses to purchase inventory, and collected those funds back with interest
when the goods were sold. For centuries, the banking industry only dealt with businesses,
not consumers. Commercial lending today is a very intense activity, with banks carefully
analyzing the financial condition of their business clients to determine the level of risk in
each loan transaction. Banking services have expanded to include services directed at
individuals, and risks in these much smaller transactions are pooled.

Banking is "accepting, for the purpose of lending or investment of deposits of money

from the public, repayable on demand or otherwise and withdrawal by cheques, draft,
order or otherwise."
Definition of bank

An organization, usually a corporation, chartered by a state or federal government, which

does most or all of the following: receives demand deposits and time deposits, honors
instruments drawn on them, and pays interest on them; discounts notes, makes loans, and
invests in securities; collects checks, drafts, and notes; certifies depositor's checks; and
issues drafts and cashier's checks.

Banks provide almost all payment services by conducting checking or current accounts
for customers, paying cheques drawn by customers on the bank, and collecting cheques
deposited to customers' accounts. Banks also enable customer payments via other
payment methods such as telegraphic transfer. Banks have added new payment channels
like Internet banking, Mobile Banking, ATMs etc.

Banks' activities can be divided into:

1. Retail banking.

2. Dealing directly with individuals.

3. Business banking.

4. Providing services to mid-size business.

5. Corporate banking dealing with large business entities.

6. Private banking, providing wealth management services to High Net Worth


7. Investment banking, relates to helping customers raise funds in the Capital

Markets and advising on mergers and acquisitions.
Banks are now moving towards Universal Banking, which is a combination of
commercial banking, investment banking and various other activities including


The history of banking can be divided into 5 parts on the bases of the important event that
took place they are namely

• Beginning
• Pre-Independence stage
• Post - Independence stage
• Nationalization
• After the Economic Reforms

Banking in India originated in the first decade of 18th century. The first banks were The
General Bank of India, which started in 1786, and Bank of Hindustan, both of which are
now defunct. The oldest bank in existence in India is the State Bank of India, which
originated in the "The Bank of Bengal" in Calcutta in June 1806. This was one of the
three presidency banks, the other two being the Bank of Bombay and the Bank of
Madras. The presidency banks were established under charters from the British East India
Company. They merged in 1925 to form the Imperial Bank of India, which, upon India's
independence, became the State Bank of India. For many years the Presidency banks
acted as quasi-central banks, as did their successors. The Reserve Bank of India formally
took on the responsibility of regulating the Indian banking sector from 1935. After India's
independence in 1947, the Reserve Bank was nationalized and given broader powers.

A couple of decades later, foreign banks such as Credit Lyonnais started their Calcutta
operations in the 1850s. At that point of time, Calcutta was the most active trading port,
mainly due to the trade of the British Empire, and due to which banking activity took
roots there and prospered.

The first fully Indian owned bank was the Allahabad Bank, established in 1865.
However, at the end of late-18th century, there were hardly any banks in India in the
modern sense of the term. At the time of the American Civil War, a void was created as
the supply of cotton to Lancashire stopped from the Americas. Some banks were opened
at that time to finance industry, including speculative trading in cotton. With large
exposure to speculative ventures, most of the banks opened in India during that period
failed. The depositors lost money and lost interest in keeping deposits with banks.
Subsequently, banking in India remained the exclusive domain of Europeans for next
several decades until the beginning of the 20th century.

Fig 1.1 The Bank of Bengal, which later became the State Bank of India

At this time, the Indian economy was passing through a relative period of stability.
Around five decades have elapsed since the India's First war of Independence, and the
social, industrial and other infrastructure have developed. At that time there were very
small banks operated by Indians, and most of them were owned and operated by
particular communities.
The presidency banks dominated banking in India. There were also some exchange banks
and a number of Indian joint stock banks. All these banks operated in different segments
of the economy. The exchange banks, mostly owned by Europeans, concentrated on
financing foreign trade. Indian joint stock banks were generally under capitalized and
lacked the experience and maturity to compete with the presidency and exchange banks.
This segmentation let Lord Curzon to observe, "In respect of banking it seems we are
behind the times. We are like some old fashioned sailing ship, divided by solid wooden
bulkheads into separate and cumbersome compartments."

By the 1900s, the market expanded with the establishment of banks such as Punjab
National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which
were founded under private ownership. The Swadeshi movement in particular inspired
local businessmen and political figures to found banks of and for the Indian community.
A number of banks established then have survived to the present such as Bank of India,
Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India

1.2.1 From World War I to Independence

The period during the First World War (1914-1918) through the end of the Second World
War (1939-1945), and two years thereafter until the independence of India were
challenging for Indian banking. The years of the First World War were turbulent, and it
took its toll with banks simply collapsing despite the Indian economy gaining indirect
boost due to war-related economic activities.
At least 94 banks in India failed between 1913 and 1918 as indicated in the following

Number of
banks Authorized capital Paid-up Capital
Years that failed (Rs. Lakhs) (Rs. Lakhs)

1913 12 274 35
1914 42 710 109
1915 11 56 5
1916 13 231 4
1917 9 76 25
1918 7 209 1

Table 1.1 Failures of Bank


The partition of India in 1947 adversely impacted the economies of Punjab and West
Bengal, paralyzing banking activities for months. India's independence marked the end of
a regime of the Laissez-faire for the Indian banking. The Government of India initiated
measures to play an active role in the economic life of the nation, and the Industrial
Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This
resulted into greater involvement of the state in different segments of the economy
including banking and finance. The major steps to regulate banking included:

• In 1948, the Reserve Bank of India, India's central banking authority, was
nationalized, and it became an institution owned by the Government of India.
• In 1949, the Banking Regulation Act was enacted which empowered the Reserve
Bank of India (RBI) "to regulate, control, and inspect the banks in India."
• The Banking Regulation Act also provided that no new bank or branch of an
existing bank may be opened without a license from the RBI, and no two banks
could have common directors.

However, despite these provisions, control and regulations, banks in India except the
State Bank of India, continued to be owned and operated by private persons. This
changed with the nationalization of major banks in India on 19th July, 1969.


By the 1960s, the Indian banking industry has become an important tool to facilitate the
development of the Indian economy. At the same time, it has emerged as a large
employer, and a debate has ensued about the possibility to nationalize the banking
industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the
GOI in the annual conference of the All India Congress Meeting in a paper entitled
"Stray thoughts on Bank Nationalizations." The paper was received with positive

Thereafter, her move was swift and sudden, and the GOI issued an ordinance and
nationalized the 14 largest commercial banks with effect from the midnight of July 19,
1969. Jayaprakash Narayan, a national leader of India, described the step as a
"masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the
Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking)
Bill, and it received the presidential approval on 9th August, 1969.

A second dose of nationalization of 6 more commercial banks followed in 1980. The

stated reason for the nationalization was to give the government more control of credit
delivery. With the second dose of nationalization, the GOI controlled around 91% of the
banking business of India.

After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer to
the average growth rate of the Indian economy.

In the early 1990s the then Narsimha Rao government embarked on a policy of
liberalization and gave licenses to a small number of private banks, which came to be
known as New Generation tech-savvy banks, which included banks such as Global Trust
Bank (the first of such new generation banks to be set up)which later amalgamated with
Oriental Bank of Commerce, UTI Bank(now re-named as Axis Bank), ICICI Bank and
HDFC Bank. This move, along with the rapid growth in the economy of India, kick
started the banking sector in India, which has seen rapid growth with strong contribution
from all the three sectors of banks, namely, government banks, private banks and foreign

The next stage for the Indian banking has been setup with the proposed relaxation in the
norms for Foreign Direct Investment, where all Foreign Investors in banks may be given
voting rights which could exceed the present cap of 10%, at present it has gone up to 49%
with some restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time,
were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning.
The new wave ushered in a modern outlook and tech-savvy methods of working for
traditional banks. All this led to the retail boom in India. People not just demanded more
from their banks but also received more.
Banks act as payment agents by conducting checking or current accounts for customers,
paying cheques drawn by customers on the bank, and collecting cheques deposited to
customers' current accounts. Banks also enable customer payments via other payment
methods such as telegraphic transfer, and ATM.

Banks borrow money by accepting funds deposited on current account, accepting term
deposits and by issuing debt securities such as banknotes and bonds. Banks lend money
by making advances to customers on current account, by making installment loans, and
by investing in marketable debt securities and other forms of lending.

Banks provide almost all payment services, and a bank account is considered
indispensable by most businesses, individuals and governments. Non-banks that provide
payment services such as remittance companies are not normally considered an adequate
substitute for having a bank account.

Banks borrow most funds from households and non-financial businesses, and lend most
funds households and non-financial businesses, but non-bank lenders provide a
significant and in many cases adequate substitute for bank loans, and money market
funds, cash management trusts and other non-bank financial institutions in many cases
provide an adequate substitute to banks for lending savings to.


2.4 4 I’S OF BANK

The growth in the Indian Banking Industry has been more qualitative than quantitative
and it is expected to remain the same in the coming years. Based on the projections made
in the "India Vision 2020" prepared by the Planning Commission and the Draft 10th Plan,
the report forecasts that the pace of expansion in the balance-sheets of banks is likely to
decelerate. The total asset of all scheduled commercial banks by end-March 2010 is
estimated at Rs 40, 90,000 crores. That will comprise about 65 per cent of GDP at current
market prices as compared to 67 per cent in 2002-03. Bank assets are expected to grow at
an annual composite rate of 13.4 per cent during the rest of the decade as against the
growth rate of 16.7 per cent that existed between 1994-95 and 2002-03. It is expected that
there will be large additions to the capital base and reserves on the liability side.

The Indian Banking Industry can be categorized:-

1. Non-scheduled banks

"Non-scheduled bank in India" means a banking company as defined in

clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949),
which is not a scheduled bank”. In simpler words non schedule banks are those
banks which are not included in the second schedule of RBI.

2. Scheduled banks

Scheduled banks constitute of commercial banks and co-operative banks. There are about
67,000 branches of Scheduled banks spread across India. As far as the present scenario is
concerned the Banking Industry in India is going through a transitional phase.

The Public Sector Banks (PSBs), which are the base of the Banking sector in India
account for more than 78 per cent of the total banking industry assets. Unfortunately they
are burdened with excessive Non Performing assets (NPAs), massive manpower and lack
of modern technology. On the other hand the Private Sector Banks are making
tremendous progress. They are leaders in Internet banking, mobile banking, phone
banking, ATMs. As far as foreign banks are concerned they are likely to succeed in the
Indian Banking Industry.

Banks from the Public Sector include Punjab National bank, Vijaya Bank, UCO Bank,
Oriental Bank, Allahabad Bank among others. In the Indian Banking Industry some of
the Private Sector Banks operating is IDBI Bank, ING Vyasa Bank, Bank of Rajasthan
Ltd, and ANZ Grindlays Bank, ABN-AMRO Bank, American Express Bank Ltd,
Citibank are some of the foreign banks operating in the Indian Banking Industry.




Expected A fair mix.


Level of

d services.


Chart 2.1 Product level

1. Core Benefit:

It is the main or core reason why the customer will buy the service of the bank. More like
the basic purpose or necessity.

2. Generic Product:

The core benefit is converted into a basic product. That is the service can use by the
customer in order to fulfill his/her needs.

3. Expected Product:

It refers to the set of attributes and conditions expected by the customers when they
purchase the service.

4. Augmented Product:

It is the additional feature that the banks provide which exceeds the customer’s

5. Potential Product:

Innovations and product differential is the bases of a Potential Product. If the banks alter
its services according to the requirements of the individual customers it reaches this level
Core Basic Expected Augmented Potential
Product Product Product
Product Product

The basic Safety of Timely service Goods waiting Mobile and

necessity to deposits rooms internet
Long banking
use banking Banking
Loan able hours Extensive
services in
funds etc. ATM network New Schemes
order to handle Low interest
tailored for
finance more rates Promotional
efficiently Discounts

Table 2.1 Product discrimation

Thus it can be seen how a particular product passes through different levels. In today’s
competitive scenario most banks try offering services at the Augmented and Potential
It is very important for any bank to identify the 7 P’s of services so was understands their
customers better and provide them with best of service. The 7 P’s are:

1. Product mix

The product mix of a company includes all different product lines a company offers to its
customers. The product line of a bank might easily include more than 100 different
services. In today’s competitive scenario it has become very necessary for a bank to
provide its customers with a wide variety of services and the best technology in order to
attract them.

Product width and depth


Width of the product mix is the number of product lines a company is offering. The
product width could be a narrow one or a wide one depending from bank to bank. A wide
mix encourages more sales since the banks are able to diversify and provide more to their
customers and they also appeal to a larger target market.


Depth of the product mix is the number of product items in each product line. Banks with
more schemes and services have more depths than those offering only a few. Here is table
giving an example of Width and Depth in the Product Mix:
Fig 2.1 Product width and depth

Similarly, different banks plan out their product portfolios and based on that, the depth
and width of their product mix can be determined. In today’s scenario, where there is
cutthroat competition and new foreign banks entering the Indian markets, it has became
more or less like a law to have very wide product lines with more and more number of
products in each line.

2. Price mix

The price mix in the banking sector is nothing but the interest rates charged by the
different banks. In today’s competitive scenario where customer is the king, the banks
have to charge them interest at a rate in accordance with the RBI directives. Banks also
compete in terms of annual fees for services like credit cards, DMAT etc. Another
important aspect of the bank’s pricing policy today is the interest charged on the Home
Loans and Car Loans. With India’s economy progressing, there are more and more
buyers seeking these loans but at a very competitive interest rate.

For e.g. A particular buyer approaches a bank for a car loan for a period of 3 years. He is
charged Rs. 20,000 as interest. However, if a sale representative of another bank comes to
know of this deal, he will try to attract the customer by giving him a better deal i.e. a loan
at a lower rate on interest. In this way, it is the customer that ultimately benefits.
The pricing factor is very important because of the kind of competition that is prevailing
today in the Indian market. However it is very important to understand that in the banking
sector, the main pricing policy is concerned with the interest rate charged. This interest
rate is however regulated by the RESERVE BANK OF INDIA and THE INDIAN
BANKING ASSOCAITION. Any one particular bank or a group of banks does not
regulate it. The interest rate charged cannot be higher than that decide by the RBI and the


This model shows a pricing strategy, which should be adopted in order to ensure
maximum satisfaction to both the bank as well as the customers.

The price should be set in such a manner that the customer is assured that he is not being
cheated or overcharged by the bank and at the same time the bank is able to reap
maximum profits. Such a pricing stand helps the bank get maximum sales as well as
profits since the customer feels that by entering such a transaction he is winning.

3. Place mix

Place mix is the location analysis for banks branches. There are number a factors
affecting the determination of the location of the branch of bank. It is very necessary a
bank to situated at a location where most of its target population is located.

Some of the important factors affecting the location analysis of a bank are:

1. The trade area

2. Population characteristics
3. Commercial structure
4. Industrial structure
5. Banking structure
6. Proximity to other convenient outlets
7. Real estate rates
8. Proximity to public transportation
9. Location of competition
10. Access

It is not necessary that all the above conditions have to be satisfied while selecting the
location but it should be tried to satisfy as many of them as possible.

3. Promotion mix

Promotion is nothing but making the customer more and more aware of the services and
benefits provided by the bank. The banks today can use a lot of new technology to
communicate to their customers. Thus different methods are used by different banks to
promote its services.
A bank may have very attractive schemes and services to offer to their customers but they
are of no use if they are not communicated properly to the customers. Promotion is o
inform and remind the individuals and persuade them to accept, recommend or use of
product, service or idea. However there some very important points that is to be
considered before the promotion strategy is made. These points are:

a) Finalizing the Budget

b) Selecting a suitable vehicle

c) Making possible creativity.

d) Testing the Effectiveness.

e) Instrumentality of Branch Managers.

5. People mix

People are the employees that are the service providers. In a banking sector, the service
provider plays a very important and determinant role in rendering the customers a
satisfactory and a good service. It is extremely essential that the service provider
understand what his customers expect from him. In the banking sector, the customer
needs to be guided in a lot of matters, which is possible only with the help of the service

The position in the eyes of the customer will be perceived by appearance, attitude and
behavior of the customer contact employees. Not only does the customer contact
employee influence the customer’s perception but also the customer base of the
organization does so.

6. Process mix

The process mix constitutes the overall procedure involved in using the services offered
by the bank. It is very necessary that the process is very customer friendly. In other words
a process should be such that the customer is easily able to understand and easy to follow.
Today if particular banks formalities are long and the procedure very complicated the
overall process fails and the customer may not be inclined towards using that banks

Let’s take for example the process for application for a car loan.

Now this mainly involves 3 things.

a) Producing of proper documents

b) Filling up of application form
c) Paying for the initial down payment.
Here the process may fail in the following cases:

i. If the customer is asked to produce a number of forms out of which some

may not be necessary at all. Thus it is very necessary that the customer be
asked for the minimum but most necessary document and not the other
unnecessary documents.
ii. In case of application form, the application form must be in a language
best understood by the customers and it should not be very lengthy one or
demanding a lot of unnecessary information.
iii. Finally the payment of initial amount. The customer should be given
options as to how he would like to pay by cheques or by credit card. Once
again the amount should be very competitive not very high above the
regular rates prevailing in the markets.
The smaller and simpler the procedure, the better the process, and the customer will be
more satisfied.

7. Physical evidence

Physical evidence is the overall layout of the place i.e. how the entire bank has been
designed. Physical evidence refers to all those factors that help make the process much
easier and smoother. For example, in case of a bank, the physical evidence would be the
placement of the customer service executive’s desk, or the location of the place for
depositing cheques. It is very necessary that the place be designed in such a manner so as
to ensure maximum convenience to the customer and cause no confusion to him.

Definition of services
Intangible products that are not goods (tangible products), such as accounting, banking,
cleaning, consultancy, education, insurance, know how, medical treatment,
transportation. Sometimes services are difficult to identify because they are closely
associated with a good; such as the combination of a diagnosis with the administration of
a medicine. No transfer of possession or ownership takes place when services are sold,
and they (1) cannot be stored or transported, (2) are instantly perishable, and (3) come
into existence at the time they are bought and consumed.

2.4 4 I’S OF BANK

There are four distinctive characteristics of service, which create challenges and
opportunities. They are commonly known as the four I’s namely:

1. Intangibility
It is that characteristics of a service indicating that it has no physical attributes that a
person may feel, hear, taste before they buy it.

For e.g.: A person who is new to a bank and wants to open up an account in the bank
cannot feel or taste it and ascertain whether the bank is good or bad before opening an
account. He has to experience it, feel how the service is, how humbly do people or the
staff members behave with him, is his money invested or put in a safe account or not. It is
only then he would come to know about the services. This could be done only from the
‘trust’ that he would have built up, as these things cannot be inspected before the use.
Therefore, most banks now a days, indulge in “tangibilizing the intangibles” i.e. they
provide tangible clues to the prospective customers like the different awards that they
have received for their superior services, their annual records, etc. this helps the
customers in selecting the banks more easily.

2. Inconsistency
It refers to variability or heterogeneity. In case of a bank, a new customer or a rarely
going customer may not get the same type of service as a regular customer may get. This
may be the case because the staff members know the person well as he comes often but
they don’t know that person who does not come in again and again.

Also another point for inconsistency is that there is variability in the service delivered by
different people than the services delivered differs from people to people. Like in case of
a bank, different staff members would provide different services. In the bank, a person
may have lot of work and may not attend to a customer .On the other hand; some other
person with the same work may attend him with great enthusiasm. In order to tackle this
inconsistency aspect, adequate training and motivation must be provided to the
employees. This will result in higher number of customers for the bank, higher profits
and subsequently lower retention rate.

3. Inseparability
Inseparability is that characteristics of a service indicating that it cannot be separated
from creator-seller of the product. Many services are created, delivered and consumed
simultaneously through interaction between customers and service producers. This is a
source of major limitation for the bank. But technology has in a big way helped the banks
to cope with this problem.
Production of services, when it comes to banks can be
performed in the following 3 ways:

(i) Co- production:

In this case both the service provider and the customer work together to produce
services. When a customer wants to withdraw cash from the banking premises, then
both the customer and the service provider needs to be present.

(ii) Isolated production:

It is that part of service that is done outside to an organization. E.g. Tele-Banking

(iii) Self Service production:

In this case, the customer uses the equipments of the service providers and self serves
it. E.g. ATM

4. Inventory
Inventory relates to the perishable characteristics of the service marketing. If a customer
starts his day at eight in the morning and ends it at four, but if bank is open only from
9:00 a.m. to 1:00 p.m. in the afternoon, then one might not be able to attend it. The
demand for banking services also fluctuates by day and hour. The day before the holiday,
weekend, most Mondays and Saturdays, pension and salary days are heavier than normal
banking hours. So service faces a lot of problem from inventory as it cannot be stored,
saved and then used later.


Currently (2007), banking in India is generally fairly mature in terms of supply, product
range and reach-even though reach in rural India still remains a challenge for the private
sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks
are considered to have clean, strong and transparent balance sheets relative to other banks
in comparable economies in its region. The Reserve Bank of India is an autonomous
body, with minimal pressure from the government.

With the growth in the Indian economy expected to be strong for quite some time-
especially in its services sector-the demand for banking services, especially retail
banking, mortgages and investment services are expected to be strong. One may also
expect M&As, takeovers, and asset sales.

Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks
(that is with the Government of India holding a stake), 29 private banks (these do not
have government stake; they may be publicly listed and traded on stock exchanges) and
31 foreign banks. They have a combined network of over 53,000 branches and 17,000
ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks
hold over 75 percent of total assets of the banking industry, with the private and foreign
banks holding 18.2% and 6.5% respectively.

With years, banks are also adding services to their customers. The Indian banking
industry is passing through a phase of customers market. The customers have more
choices in choosing their banks. A competition has been established within the banks
operating in India.

With stiff competition and advancement of technology, the services provided by banks
have become more easy and convenient. The time when you had to wait in those endless
quos to withdraw cash or waiting a month for outstation cheques to be get cleared are
gone .today everything needs to happen at lighting pace and the customer wants his work
to get finished in min amount of time.

Earlier people were attracted towards MNC banks as they were providing more facilities
to their customers as people now a day were becoming more tech savvy, they want
everything at their finger tips, which foreign banks were providing them by charging
more money. So they prefer private bank rather than nationalized banks.


‘We are the world's local bank’

The Hongkong and Shanghai Banking Corporation Limited was

established to finance the growing trade between China and Europe.

Headquartered in London, HSBC is one of the largest banking and financial services
organizations in the world. HSBC's international network comprises around 9,500 offices
in 85 countries and territories in Europe, the Asia-Pacific region, the Americas, the
Middle East and Africa.

HSBC have a diverse workforce of 312,000 people.

With listings on the London, Hong Kong, New York, Paris and Bermuda stock
exchanges, shares in HSBC Holdings plc are held by around 200,000 shareholders in
some 100 countries and territories. The shares are traded on the New York Stock
Exchange in the form of American Depositary Receipts.

Through an international network linked by advanced technology, including a rapidly

growing e-commerce capability, HSBC provides a comprehensive range of financial
services: personal financial services, commercial banking, corporate, investment banking
and markets, private banking and other activities.

To more easily promote the Group as a whole, HSBC was established as a uniform,
international brand name in 1999. In 2002, HSBC launched a campaign to differentiate
its brand from those of its competitors by describing the unique characteristics which
distinguish HSBC, summarized by the words 'The world's local bank'.
Fig 3.1 HSBC Bank (branch in Mumbai in 1950)

The antecedents of the HSBC Group in India can be traced back to October 1853 when
the Mercantile Bank of India, London and China was founded in Bombay (now
Mumbai). Starting with an authorized capital of Rs 5 million, the Mercantile Bank soon
opened offices in London, Madras(Chennai), Colombo and Kandy, followed by
Calcutta(Kolkata), Singapore, Hong Kong, Canton(Guangchow) and Shanghai by 1855.
The following hundred years were in many ways propitious for the Mercantile Bank. In
1950 it moved into its new head office building in Mumbai at Flora Fountain.

The acquisition in 1959 by The Hongkong and Shanghai Banking Corporation Limited
of the Mercantile Bank was a decisive factor in laying the foundation for today's HSBC
Group. Founded in 1865 to serve the needs of the merchants of the China coast and
finance the growing trade between China, Europe and the United States, HSBC has been
an international bank from its earliest days.

After the Mercantile Bank was acquired by The Hongkong and Shanghai Banking
Corporation, the Flora Fountain building became and remains to this day, the Head
Office of the HSBC Group in India.
Through the 1990s, HSBC has vigorously developed its role as one of the leading
banking and financial services organizations in the world. Its strategy of 'managing for
value' emphasizes the Group's unique balance of business and earnings between older,
mature economies and faster-growing emerging markets. HSBC in India is proud to have
retained the Group's pioneering streak by being an active partner in the development of
the Indian banking industry - even giving India its first ATM way back in 1987. The
organization’s adaptability, resilience and commitment to its customers have further
enabled it to survive through turbulent times and prosper through good times over the
past 150 years.


FIG 3.2 HSBC BANK (IN2002)

‘We are the world's local bank’

In 2002 the company has started billing itself as” the world’s local bank” as they have
their banking activities in each and every country. So people can do their banking
activities from any country they want. Also they have spent $2 billion to buy and
recapitalize their company. Due to which they got 5.5 million customers from 1400 new
branches and open its head office in London.

Also at HSBC they provide services to customer keeping in mind the nature of
individual, country in which they are residing, and many more things. They take care of
individual feeling which is part of their customers’ life.
Our private bankers are highly trained, experienced individuals and will be your single
point of contact for any of your banking needs. They serve a limited number of clients to
ensure you always receive the level of attention we require. Relationship Manager can
help us select from our full range of banking services including:

• Bank Accounts.
• Fixed Deposits.
• Credit Cards.
• Debit Cards.
• Cash Management / Remittances.
• Foreign Exchange.
• Lending Product.
• Custody and Safe-keeping.

Apart from the above essential banking related services required for our individual needs,
they can also introduce us to our Corporate and Investment Banking as well as
Commercial Banking services to cater to the needs of our business.

1) Types of accounts

Fig 3.3 Currencies

a) Saving account:
• Automatically transfer extra savings from our savings account to a fixed
deposit, through a standing instruction, to enable us to earn higher interest.
• Eligible for a fee waiver on HSBC credit cards.
• Introducing Card-to-Card Transfer facility - a funds transfer service that
enables to transfer money in an easy, fast, convenient and safe manner using
the VISA MONEY TRANSFER service from VISA.
• HSBC Demat Account services with waiver on account opening charges.
• Keep track of our savings account with free quarterly account statements.
• Free personalised chequebook.
• Buy mutual fund products offered by select mutual fund houses.
• Manage our savings account, make transactions, and pay our bills and
much more by taking advantage of HSBC's free Internet Banking facilities.

We also get debit card, credit card, international debit card and also special relationship
discounts where customers (for 6 months or more) are entitled to a 0.5% discount
on the upfront processing fee for Home loans and Personal/Professional loans and
on the annual service charges for Asset Link.

Current account:

These accounts are for businessmen who need to operate their account frequently as
compare to saving account. They also get overdraft facility. They also get HSBC
direct where they can use internet facility to operate their banking activities. But if
they come within bank premises and ask for any facility like balance for their
bank account then they will be charge for the same.

b) Smart Money account:

• Higher interest rates: Open a Smart Money Account with a minimum fixed
deposit of Rs. 25,000 and get high returns. They have special rates for special
• Free savings accounts: Get a free savings account, without having to maintain
any minimum balance.
• Up to 90% overdraft: We can withdraw up to 90% through an overdraft facility.
We can pay interest only on the amount overdrawn, while we earn interest on
100% of our fixed deposit.
• Anytime access: Access our Smart Money Account 24 hours a day through our
ATMs, Phone Banking, and Internet Banking. We also get our own personalized
cheque book.
• Free HSBC credit card: Make the most of our hard-earned money with money
saving features and value added benefits.
• Free HSBC International debit card: The HSBC International debit card allows
us to withdraw up to Rs. 25,000 per day, with higher withdrawal limits for Power
Vantage and HSBC Premier Customers.

• Free online bill payment services: Make all our bill payments online and avoid
the hassles of physical payments. It's convenient and quick.
c) HSBC Premier:
HSBC Premier is the group's premium financial services product. The exact benefits and
qualification criteria vary depending on country, but typically require deposits and
investments of at least $100,000, £50,000, or €100,000, or a mortgage of at least
$500,000 or £250,000. Customers have a dedicated relationship manager, global 24 hour
access to call centers and preferential rates.

HSBC Premier Benefits:

HSBC Premier supports us at home and abroad, with executive services ranging from
investment advice to worldwide emergency support.

• Banking and investment specialists with both global and local knowledge,
providing executive financial advice.
• International Recognition and Emergency Support
• HSBC Premier can provide useful local information from restaurants to cultural
events and entertainment.
• The international banking benefits that HSBC Premier provides will also cover
our family, so we can rest easy while our children travel for study or work.

HSBC Premier's international banking services include:

• Priority service for all our international banking needs

• In an emergency, simply call HSBC Premier's emergency hotline PREMIER for
priority international assistance
• Emergency cash advance of US $2,000 together with next-day card replacement
in the event of loss or theft.

NRE Account:

With an NRE account, we can manage all our Indian Rupee transactions be it paying for
our home loan EMI or sending money to our loved ones, using our overseas
Can open the NRE Account as a savings or a current account and it can also be
opened jointly with other NRIs.

Features & Benefits

• With this account, we can send money to India for FREE. And fast!
• Both principal and interest are freely repatriable and interest earned is tax free in
• Access our accounts from over 1 million HSBC/VISA/Plus ATMs and purchase
at over 26 million establishments across the world
• FREE Debit card for our family for giving them instant access to our account.
• Manage Rupee payments with ease through Internet Banking – place an online
request for free funds transfer to 3rd party accounts in India or choose the free
Rupee Draft Delivery.
• Also transfer funds to 3rd party accounts in India through RTGS at a charge of
INR 250 (plus applicable taxes) per instruction which can be submitted vide duly
filled RTGS form, at any HSBC branches in India or an NRI Centre in the country
of our residence. RTGS done through Internet Banking would be charged at INR
50 (plus applicable taxes) per instruction.
• Get anytime, anywhere account access: Track, access and operate our account
from across the world, 24/7 through Internet Banking and Phone Banking
• Also avail the Standing Instructions facility to manage our monthly payments
• Eligibility minimum deposits for NRE Savings Account is INR 25,000/-

d) NRO Account:

HSBC’s NRO Account enables us to manage our income generated in India, be it rent
income or dividend warrants, with ease and convenience. What’s more, we can also send
money into this account from overseas to manage our payment commitments in Indian

Can open a NRO Account as either a savings or a current account and it can even be
opened jointly with a Resident Indian.

Features & Benefits

This account offers us a host of exciting inbuilt features and benefits:

• Send money home Free: Send money home to our family and friends in India,
absolutely free. Meet our personal commitments such as loan repayments and
other expenses!
• Manage our Rupee payments easily through Internet Banking - place an online
request for free funds transfer to 3rd party accounts in India or choose the free
Rupee Draft Delivery
• Also transfer funds to 3rd party accounts in India through RTGS at a charge of
INR 250 (plus applicable taxes) per instruction which can be submitted vide duly
filled RTGS form, at any HSBC branches in India or an NRI Centre in the country
of your residence. RTGS done through Internet Banking would be charged at INR
50 (plus applicable taxes) per instruction.
• Withdraw cash at over 23,500 HSBC/Visa/Plus ATMs and shop at over 3, 50,000
merchants in India with a Debit Card.
• Also avail the Standing Instructions facility to manage our monthly payments.
• Get anytime, anywhere account access: Track, access and operate your account
from across the world, 24/7 through Internet Banking and Phone Banking.
• Eligibility minimum deposits for opening NRO saving account is INR 10000/-.

Comparison of Accounts
S Account Account Account Deposits Deposits
Account Savings Savings Fixed Fixed Deposit Fixed deposit
Type Account Account Deposits
Current Current
Account Account
Currency Indian Indian US Indian Rupees Indian Rupees
Rupees Rupees Dollars,
Pounds ,
Repatriation Fully Restricted Fully Fully Restricted
Repatriabl Repatriabilit Repatriabl Repatriable Repatriability
e y (post e (post
deduction of deduction of
applicable applicable tax)
Tax Tax free* Taxes Tax free* Tax free* in Taxes
in India applicable in India India applicable
Joint Only with Resident Only with Only with Resident
Account other Non- Indians as other Non- other Non- Indians as well
Resident well as other Resident Resident as other NRIs
Indians NRIs Indians Indians
Deposits of Not permitted Not Not permitted Permitted
local rupee permitted permitted
Advantages Rupee Account for Allows Earn higher Earn higher
account your income you to returns on returns on
with full earned in maintain Rupee funds your Rupee
repatriatio India like your compared to a income earned
n benefits rent income, overseas savings/curren in India
dividend, etc funds in t account. compared to a
foreign savings/curren
currency t account.

The HSBC Group has a significant presence in each of the world's major financial
markets, with the Americas, Asia Pacific and Europe each representing around one third
of the business. With 10,000 offices in 83 countries, 210,000 shareholders, 330,000 staff
and 128 million customers worldwide, HSBC arguably has the most international
presence among the world's multinational banking giants.

The HSBC Group operates as a number of local banks around the world.

2) ATM

An ATM provides us with most of the business banking services. The Debit Card from
HSBC is extremely versatile and simple to use, being valid both in India and overseas.
The cardholder can use the Business Debit Card at any HSBC or over 14000 VISA
ATMs in India. This allows us 24-hour access to any of the current accounts linked to the
Business Debit Card. Business Debit Cards issued to Sole Proprietors and Partnership
Firms can be used for making purchases at any of the 120,000 VISA Electron/ VISA
merchant outlets in India.

Features & Benefits

• Save time: By banking at the ATM, we save on time spent traveling to the branch
or waiting for a teller.
• 24x7 banking: At the ATM, we don't need to worry about reaching before closing
time and banking on holidays.
• Security features: When we bank at the ATM, we can make the most of its secure
features like daily transaction limits and ATM receipts that help us keep track of our
• High daily transaction limits: We can withdraw up to the following amounts
per day Business Select: Rs 200,000
• New Debit Card: Can apply for a HSBC debit card, which will enable us to
transact at non-HSBC VISA ATMs. The debit card is FREE for Business Select
• Transfer funds between accounts within HSBC: The funds transfer facility
allows us, to transfer funds instantly between accounts. Funds can be transferred to
our own accounts or any third party account held with HSBC.
• Account balance enquiry (possible at non-HSBC ATMs): We can check
our account balance at any of our nearest HSBC or non-HSBC ATM.
• Details of recent 8 transactions: Through ATM we can get details of recent
transactions carried out in our account.
• Deposit cash / cheques: We don't need to visit the branch the next time we need
to deposit cash / cheques. The ATM clearing times are displayed at each ATM.
• Request for new cheque book: Can place a request for a new cheque book
through the ATM absolutely anytime instead of going to the branch.
• Pay your HSBC credit card: Can deposit our HSBC credit card bill payments
at the ATM near us.

3) Credit cards

Types of credit cards:

a) Premier MasterCard:

Advantages of the HSBC Premier MasterCard include:

• A local best in class rewards programme that entitles us to superb offers on

shopping, dining, entertaining and travel experiences around the world
• Emergency cash advance of US $2,000 and next-day card replacement in the
event of theft or loss
• A supplementary credit card for us or our child with full emergency assistance
and support plus a credit limit that we control.

b) Platinum credit card:

Different people demand different things from life. For those who never settle for the
ordinary but seek the best, presents the HSBC Platinum Credit Card.


• Cash advance: Get instant access to cash, round the clock, at close to 1 million
ATMs worldwide
• Additional credit cards: Gift our loved ones (spouse, parents, brothers/ sisters,
children) the freedom of spending by availing of upto 3 additional cards.
• Zero Lost Credit Card Liability Benefit: Credit cardholders have zero lost-
credit card liability after the loss of the credit card has been reported to the Bank
in writing or to the VISA Global Emergency Assistance Helplines.
• Credit Shield Extension: This feature provides a life insurance cover for an
amount of Rs.40, 000 for Platinum credit cardholders with TATA-AIG Life
Insurance Company Ltd. in the event of death due to non-accidental cause.
c) Gold credit card:

Different people look at our credit cards differently. With special money saving features
and time saving services, it could mean the perfect way to save money for all the precious
things we always desired or a convenient way to make time to do more.

Classic credit card:

Money and time are as scarce as they are precious. At HSBC, they understand this and
offer us special money saving features and time saving services. So we can get the most
out of both, our money and our time.

4) Business Internet Banking

Business Internet Banking (BIB) allows us to carry out our banking transactions
anywhere in the world, anytime of the day, 7 days a week. BIB is a secure transacting
environment as HSBC uses some of the most advanced technologies available. With the
Security Device, Business Internet Banking is doubly safe.

Features & Benefits

• Online security: Online banking with HSBC is one of the safest, as we use some
of the most advanced technologies. An internet web page is considered secure if
the URL address begins with https:// or a padlock symbol appears in the lower
right hand corner of the browser. They use 128-bit SSL encryption technology to
encrypt our personal information. In case we forget to log-off or our computer
remains inactive for a period of time, then their systems automatically log us off.
With the Security Device, Business Internet Banking is doubly safe. The Security
Device generates a unique dynamic code that changes randomly based on a
complex algorithm. To use our HSBC online account, we need to enter the
security code in addition to our username and password.
• Convenience: 24 hour access to our accounts, 7 days a week, wherever we are.
• Save valuable time and resources: Avoid queues at branches.
• Save money: Save up to Rs. 250 each time we make a demand draft through the
• Transfer funds online: Make electronic payments between our accounts within
HSBC, or to other bank account across India.
• Account balance enquiry: Check our account balance from the convenience of
our office or home any time of the day.
• Statement requests: We do not need to visit the branch to request for our
statement. We simply need to do this with one click.
• Request for new cheque book: Through Business Internet Banking, we do not
need to visit the branch to order for the cheque-book.
• Open Fixed Deposit: Create and manage our company fixed deposits online.
• Stop Cheque: Stop payment of a single cheque or a series of cheques, 24 hours a
• Pay your bills online: No more bill queues, no more missed due dates; we can
now use HSBC's convenient and flexible Bill Payment service to pay our bills.
We can pay our mobile, telephone, gas, electricity bills and insurance premiums.

5) HSBC Direct
HSBC Direct is an online direct banking operation which attracts customers through
high-interest savings accounts and no service charges or minimum account balance
requirements. It was first launched in the USA in November 2005 and is now available in
Canada, Taiwan and South Korea.



1) Customer groups

HSBC splits its business into four distinct groups:

• Personal financial services

HSBC provides more than 100 million customers world-wide with a full range of
personal financial services, including current and savings accounts, mortgage loans, car
financing, insurance, credit cards, loans, pensions and investments.

• Commercial banking

HSBC provides financial services to small, medium-sized and middle-market enterprises.

The group has almost 2.5 million of such customers, including sole proprietors,
partnerships, clubs and associations, incorporated businesses and publicly quoted

• Global banking and markets

This customer group provides tailored financial services to corporate and institutional
clients. Business lines comprise Global Banking, Global Markets, Global Asset
Management, Global Research and Principal Investments.

This division was previously known as Corporate, Investment Banking and Markets.

• Private banking

HSBC Private Bank is the marketing name for the private banking business conducted by
the principal private banking subsidiaries of the HSBC Group worldwide. HSBC Private
Bank, together with HSBC Guyerzeller and the private banking activities of HSBC
Trinkaus & Burkhardt, known collectively as Group Private Banking, provides services
to high net worth individuals and their families through 93 locations in some 42 countries
and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and
Africa. As of December 2007, profits before tax were US$1,511 million and combined
client assets under management were US$494 billion.

2) Overseas Account Opening and Worldwide Online


Advantages of banking with HSBC Premier include:

• Just one call will initiate the process to set up an HSBC Premier account in our
new country of residence. our credit cards, debit cards and cheque books will
arrive within 10 working days
• A local HSBC Premier Relationship Manager will assist us in planning for our
financial needs
• View our HSBC Premier accounts from anywhere in the world with our unique
Global View online banking service

3) Banc assurance

Banc assurance means the sale of insurance and other similar products through a bank.
This can help the consumer in some situations; for example, when a bank requires life
insurance for those receiving a mortgage loan, the consumer could purchase the insurance
directly from the bank. Some critics feel that banc assurance gives the bank too much

Tata AIG Life Insurance Company has launched it first banc assurance product with
HSBC Bank. The products will be sold by HSBC Insurance Services India an associate of
HSBC Bank set up exclusively for the purpose of insurance distribution.

Unlike other life insurance policies which are sold by agents, HSBC Insurance services
will be mass marketing the terms insurance cover to the one million customers of HSBC
Bank. The customers include account holders and credit card holders of the bank.

The HSBC group plans to get into insurance distribution through both the corporate
agency as well as through the insurance broking channel.

While the bank plans to become a corporate agent through the bancassurance route, the
broking business will be undertaken through a separate affiliate. At present, HSBC sells
insurance products of Tata AIG Life and General Insurance through a separate company,
HSBC Insurance Services.

4) Mutual fund
• Reduced risks: While we expand our portfolio, mutual funds help us reduce
our overall investment risk by diversification of investment
• Speedy access to our money: As most of the mutual funds can be bought
and sold on any dealing day (which normally means weekdays), we get easy
access to our money at short notice
• Affordability: Because of its large corpus, even a small investor can benefit
from its investment strategy
• Tax benefits: We get tax benefits on treatment of long-term capital gains
• Low costs: The benefits of scale in brokerage, custodial and other fees translate
into lower costs for investors

5) Mobile Alerts

Mobile Alerts for Business Banking customers is a service that allows us to stay updated
on our business banking transactions wherever we are.


• Keep track of our company accounts, loans and investments with HSBC
• Save time – fast, easy and convenient – no need to visit our branch or call
customer service
• Reminder alerts can be scheduled for payment due dates on our HSBC loans and
business overdrafts
• Once we register, SMS alerts will be sent to us automatically as per our
• This service is absolutely free!!!

List of Available Alerts

1. Business Banking

i. Credit SMS Alert

ii. Debit SMS Alert
iii. Account Balance SMS Alert

2. Loan against Property

i. Payment Due SMS Alert
ii. Payment Overdue SMS Alert

3. Fixed Deposit

i. Reminder SMS

6) Cheque Deposit Machines

We do not need to stand in queue at the branch any more to deposit a cheque with our
cheque deposit machines. We can deposit get a comprehensive receipt with cheque image
and deposit account's name.



As the different customer has different demands their taste or preference also changes, so
there are chances that the bank may not be able to fulfill their requirement as per their
way. So to solve this problem following steps customer can follow to solve his problem.

In case there is any service failure in the bank then customer can do complaints in three
1. Online registration of complaints.
2. Through telephone.
3. Face to face complaint.
In online registration of complaints the customer can directly register their complaints
through internet. The main advantage of this system is that the customers who are very
busy in their schedule can opt for this type of method for doing complaint regarding any
service they have. Mostly the customer of the bank uses this method as it saves the time
and also problem can be registered in website. Whenever they are free as it is online can
be made anytime from anywhere they can excess this facility and take the advantage of
the same.

Another method which they can follow is through telephone i.e. the customer can ask to
solve their problem in telephone itself. Here they have to give their personal details to the
telephone operator and also details of the problem which they are facing.

Face to face complaint the customer can also come personally in the bank can ask to
solve the problem there are special counters in the bank to solve the problems called
customer relationship counters where they can directly talk to the executives about their
problems and the person handling the complaints are called officers or executives.

Mostly the problem is solved by the officers but in case if the complaint is not solved by
the officers than they can approach to the branch manager to solve their problems. But
solving the problem takes its own time as it depends on the type of problem raised. Here
the problems are being categorized according to their importance and urgency of the
same. So some complaints need time to get solved and some are solved in no time. So it
depends on kind of problems or complaints.





Allahabad Bank was established in 1865, and is one of the oldest banks in India. Previously the
head-quarter of Allahabad Bank was in Allahabad, which was later transferred to Kolkata. The
Government of India, in 1969, nationalized 13 other commercial banks along with Allahabad Bank.
Allahabad Bank has nearly 1900 branches all over the country. The Chairman and Managing
Director of Allahabad Bank is Avinash Chander Mahajan.


Nineteenth Century

The Oldest Joint Stock Bank of the Country, Allahabad Bank was founded on April 24, 1865 by a
group of Europeans at Allahabad. At that juncture Organized Industry, Trade and Banking started
taking shape in India. Thus, the History of the Bank spread over three Centuries - Nineteenth,
Twentieth and Twenty-First.

April 24, 1865's

The Bank was founded at the confluence city of Allahabad by a group of Europeans.

Twentieth Century


The Bank became a part of P & O Banking Corporation's group with a bid price of Rs.436 per share,


The Head Office of the Bank shifted to Calcutta on Business considerations.

July 19, 1969

Nationalized along with 13 other banks, Branches - 151 Deposits - Rs.119 crores, Advances - Rs.82

October, 1989